Radiation Therapy Services has amended an expiring credit facility to grow borrowing capacity that will set the firm up for acquisitions. The company's $25 million term loan was increased to $35 million and the revolver was increased to $140 million from $80 million.
"Radiation Therapy's credit facility was expiring in 2007, so timing was our main driver," said Dave Koeninger, Radiation Therapy's cfo. However, the company's desire to have greater capacity for acquisitions and the market's willingness to provide additional liquidity were also incentives, he noted. The new facility matures in 2010.
The Fort Myers, Fla.-based company plans to expand into one or two new U.S. markets by purchasing existing radiation services operators. Radiation Therapy currently operates in 10 states.
With the amendment the spread also shrunk by 25 basis points. Pricing on both Radiation Therapy's revolver and term loan are tied to leverage. An average low spread is LIBOR plus 1 1/2%, while a high is LIBOR plus 2 1/2%. Koeninger said Radiation Therapy was able to improve pricing because the company's credit and financial profile has perked up. Radiation Therapy went public in June.
According to Koeninger, Radiation Therapy did not go out to shop the deal. Instead, the company was approached by its bank group "who suggested to us the availability of the additional financing." Bank of America and Wachovia Bank are lead banks and Carolina First Bank and International Bank of Miami join the existing syndicate of Fifth Third Bank, SunTrust Bank, Regions Bank and National City Bank.